Beat The Bank: Simply Successful Investing

If there’s anyone who knows how to beat the bank at its own game, it’s 35-year banking industry veteran turned investor advocate Larry Bates. His new book, Beat the Bank: The Canadian Guide to Simply Successful Investing, just hit the shelves and in it he reveals the winning formula to turn the tables on Bay Street and double your investment returns.

Larry first came to my attention when he introduced the T-REX Score, a calculator that tells you how much of your investment return you actually get to keep versus what gets lost to fees. It’s a shocking illustration of the damage fees can do to your long-term investment returns. Using his T-REX Score as the catalyst, Larry continued to sound the alarm over high mutual fund fees and conflicted investment advice. I liked him immediately.

I got early access to read Beat the Bank this summer and I was thrilled to provide an endorsement for this simple, practical guide to successful investing:

Beat the Bank: Book Review

Larry’s extensive experience in investment banking, primarily with RBC Capital Markets, gives him keen insight into the Canadian financial system. He says that very few Canadians understand how much they are paying for investment products and services, or how much value they’re getting in return. That lack of knowledge serves Bay Street well and allows banks, brokers, insurers, and financial advisors to collect fat fees from your investments – fees that have barely budged over the years.

Why don’t Canadians take the time to find out what’s going on behind the scenes? Several reasons:

Unconditional trust in the advisor or institution (Bank loyalty)

Erroneously assuming there are no fees (“Our financial advisor is such a nice man. Every year he takes us out for a wonderful dinner. I wish we could pay him in some way.”)

Not knowing the right questions to ask

Fear of asking a ‘dumb’ question (Information asymmetry)

Not wanting to seem impolite (We’re Canadian, eh?)

Mistaken belief that the advisor or institution must act in the customer’s best interest (Instead we have the inferior ‘suitability’ standard)

Disinterest

“I just don’t have time”

What this ultimately means is that hard-working Canadians are losing up to half their wealth over time as fees quietly strip away their lifetime investment gains.

The Enlightened Banker

From his ivory tower on Bay Street, shielded from the plight of ordinary investors, Larry got a wake-up call from his sister who was nearing retirement and wondering why her mutual funds had gained so little over the last 20 years. Fees of 2.3 percent over two decades had eaten up 30-40 percent of his sister’s retirement nest egg.

Embarrassed and ashamed of his employer and the investment industry, Larry has become the ‘enlightened banker’ and staunch advocate for Canadian investors.

He wants investors to beat the bank – make Bay Street work for you rather than against you – by taking advantage of one of three methods of Simply Successful Investing:

Do-it-yourself investing (blue chip stocks and high quality bonds)

Assemble-it-yourself investing (Index mutual funds and ETFs)

Robo-investing

Old Bay Street Tricks

One of the tips you’ll read in Beat the Bank is to avoid high-fee balanced mutual funds sold by the big banks – what Larry calls Old Bay Street packaging.

“Be aware of the powerful grip Old Bay Street has on you. Realize that Old Bay Street’s Pitch, Plan, Product, Prize strategy is a sales pitch, not objective advice.”

He also has a list of “No Thanks! Investments You Can Ignore”, including corporate bonds, preferred shares, mortgage investments, gold, and Bitcoin and other cryptocurrencies.

Wealth Builders and Wealth Killers

Larry writes about reducing the impact of ‘wealth killers’, or eliminating them altogether where possible. The number one wealth killer is fees, and you’ll want to identify and reduce them.

Wealth killer number three is inflation. It diminishes your purchasing power over time. That’s why saving is not enough – you must invest your savings to beat inflation and protect your purchasing power.

Combat wealth killers with wealth builders: the amount you save and invest, the length of time your investments have to grow, and the rate of return at which your investments grow.

He ends with 10 rules or commandments to beat the bank and double your investment returns through simply successful investing:

Learn investment basics

Understand The Wealth Formula

Know your T-REX Score

Recognize how Bay Street operates

Be a long-term business owner

Know your risk tolerance

Make a simple plan

Invest like clockwork

Ignore the market

Enjoy life!

Final thoughts

Beat the Bank is an insightful look into fee machine known as the Canadian investment industry. It offers more than just platitudes against the industry, though, as author Larry Bates provides the playbook for investors to build and grow their wealth at any age and stage of their lives.

Time for a Giveaway!

Larry was kind enough to send me an extra copy of Beat the Bank to give away to one lucky Boomer & Echo reader. To enter, just leave a comment below and share your own experience with beating the bank, or when you became an ‘enlightened investor’.

The contest will be open until 5:00 p.m. EST on Friday September 14. I’ll announce the winner in the next edition of Weekend Reading. Good luck!

I really waNt to read this I’m retiring and trying to learn more about self directed investing in taking a mini course on retirement and investing through CSI it’s a good investment~ and SNOWBIRDS STOP BUYING CURRENCY THROUGH YOUR BANK use Knightsbridge for a better discounted exchange rate I just saved $219 on a transaction compared to my “PREFERRED” RBC quote ~

I pulled away from an advisor/firm after I totalled what fees I had paid vs what I had earned and realized the industry had earned more than I had while I had taken all the risk. DIY is all I’ve ever known after that awakening.

My Dad was an immigrant who worked two jobs his entire life, put five kids through university (all of us have degrees) and he actually continued to work as a book-keeper into his late seventies. He had trusted his financial advisor and invested a substantial amount
of his savings in mutual funds with a well-known BMO affiliate. When I started accumulating enough money to invest, he suggested I do the same and I followed his lead. After a few years, I decided that too much of my money was deducted for fees (and that’s only what was made visible, we now are aware that there were kickbacks that advisors received for selling certain funds of course…!) so I closed my account and started doing my own trading. I’ve never regretted my decision. I’m doing VERY WELL and try to educate those around me who care to listen and learn.

I’ve got teenagers now, and they definitely had trouble grasping that the Banks are businesses out to make a profit and have no duty to advise you appropriately about what to do with your money. So I guess somehow at a young age kids develop the blind loyalty to banks… I wonder if the idea is embedded in cartoons? Anyway, good to get the information out – I would love a copy of this book!

I just changed financial advisors and now I wish I had had this book prior to changing. One of the key reasons was that I went against my “gut feeling” which is: if you don’t understand the investment don’t buy it. Yes, I bought some that, although they increased in value or provided good returns, still made me feel uneasy. There was little transparency too. I always wondered, “Why are you recommending THIS particular fund or product?” I think I still made the right decision (for a number of reasons) but would love the opportunity to learn more.

I love the reasons why. Trusting a bank, assuming no fees, dinner with advisor, impolite, belief that the advisor acts in the customer’s best interest. That’s why you have to become self-educated…like using a book like this 😉 Either self investing or robo investing…that’s the way to go!

Would love to be able to convince our Pension managers at work that we shouldn’t rely on Mutual Funds for our pensions, due to the fees being way to high. Can’t get them to buy into it. Maybe this book will enlighten them.

In the 1990 my investment with a bank adviser was barely making gains. Started to educate myself and subscribed to the Succesfull investor. Took control of my investment and here we are. Retired and doing well. Long term diverse investing.

Advice like this from Larry is priceless and invaluable. Of course none of the big banks and investment companies will tell you since they need to keep taking your hard earned money. Thank you for the information Larry and Robb.

I started off investing with a financial advisor but then started slowly investing on my own. Funny (not funny), my own investments are doing better than those left with the advisor. I’m in the process of (politely lol) transferring over the investments from the advisor now. I’m still uncertain about a lot of investment strategies so this book would help with many investment decisions-rrsp, tfsa, non-registered, taxes etc…. Id love to pass it on to my young adult children to give them a better start too! Thanks.

I was reading this both excitedly and despondently. Excitedly because I just recently saw the light (I just finally opened up an account 4 weeks ago and started self-directed investing with a small balance). Reading this post just gave me the courage to finally pull my accounts from the bank. I’m despondent because if his sister lost 30-40% of nest egg, then I must have too since I have been blindly investing in several mutual funds with the big bank for almost 15 years and wondering why my gains don’t match the gains of their fancy charts. That’s almost 15 years I can’t get back. But… as someone starting in their early 40s, I guess I just have to try to think I have a wee bit more time yet. This book will come in very handy in my journey to be an enlightened investor. Thanks for this post! I needed it.

My son keeps telling me to go with E-trade as its around $10.00 a trade where I pay $150 to the bank and I’m always telling them what to buy or sell! Doesn’t make sense! Yes “Beat the Bank” would be a good read!

I NEED this book!!! After investing for many years I am sick by how much I’ve paid in fees. I want to switch to DIY but am fearful and unsure. This book would help educate me and guide me to a better future.

This is the book I’ve been waiting for to help me pull the trigger to start my own self directed retirement plan
I am paying my advisor over 1% plus fees for F class mutual funds
Looking forward to getting this book

This book sounds like a gold mine. Every time I have to deal with a bank I bring a list of all competitors rates and plan and show that to them indicating to the bank that I can move my assets elsewhere, otherwise give me the same plan or better.

Over the last year I’ve been bitten by the ‘early retirement’ bug and trying to reduce fees and increase my savings rate so I don’t have to work til I’m 100. This sounds like a great read to help me on my way!

I’m still in the process of becoming an enlightened investor. I have a financial advisor who’s under fiduciary duty and charges only 1% on my investments and gives advice on broad topics (insurance, estate planning, etc.). I know I would have made mistakes in the past if not for the support he gives me, but I do still wonder if I should have used index funds years ago. I’m still learning.

I had to teach myself about investing when my “advisor” refuse to teach me anything about fees, mutual funds and so on. During my meeting, the advisor read off from a piece of paper and the advisor sounded so bored that it became so awkward for me.

The advisor kept trying to make me buy insurances. When the advisor realized that I caught on to the sales tactics, gone are those my monthly wellness calls, gone are those thank you cards during Christmas, gone those nice comments. Any questions are just replied by one word answers “sure” “no” “yes”and now I have to talk to the secretary before the advisor will answer any questions.

I became enlightened after getting our money back from an Investment Manager and seeing how much I had paid for them to hold the stocks that I had originally purchased 20 years before. Fortunately, I only ran that experiment for 6 years, could have been worse. Now I’m investing my own money and feel as secure as I did when they were holding it. I’d love to read this book. Thanks for hosting a giveaway.

I wish this book had been available 30 years ago. We spent years in mutual funds that did nothing for us. Since we changed to investing in dividend stocks we have made much more money. Though I think the fees we pay are still too high. I could cry when I think of those wasted years.
I hope my grandchildren will be much smarter than I was. Basic investment should be taught in schools and not left to each individual ad hoc experience.
Here’s hoping I win!

We have moved our rrsp from high fee mutual funds to a simple etf portfolio at an online broker. Thank you to Robb and Marie for all we have learned from you. I think this book will become part of our library. I can relate to Chris Dowling’s comment.

Became “enlightened” when I lost a significant amount of equity in the oil downturn of 2015. Realized that I was too heavily weighted in one sector based on blindly following the information financial advisors and the company I was employed with recommended which was my mistake. In addition, my less heavily weighted towards commodities mutual funds all had high MERs and the only one getting rich was my banker which was also my mistake. It’s been like a baby deer trying to stand up these past few years, but I am so thankful that I learned the valuable lesson while still young enough to retool and take a long term and balanced approach. It’s great to see that folks like Larry Bates are lifting the veil for a broader audience.

Before retirement, aside from a small pension plan, I held any savings in a GIC or mutual fund at my local bank.
After retirement, I began to explore how I might gain a greater return on my savings. It wasn’t long before I shifted my modest investment TFSA / RRSP savings to a robo advisor.
The next shift that I envision is to avoid fees altogether (a T-REX score of 100%) and use a no-fee brokerage to place my TFSA / RRSP investments in one globally diversified fund of funds ETF.
I no longer walk in total darkness; a little light has been shed on my path.

We sold our house in 1997, full timed rved, put our money in a guaranteed investment for a year. The following year our broker insisted he would manage our investment, conservatively, make us money so when we were ready to settle back to a house we would have more funds. Unfortunately after 7 years we were left with 12,000 dollars. The lesson learned was trust no one with your money. I started reading about investing, in 2005 transferred what money was left and managed my own money. My RSP had 90,000 dollars in it then, in 1998 I started withdrawing on average of 10,000 dollars per year, and still have over 100,000 in this account. My TFSA has done very well, as well as a moderate cash account. Doing my own investing has allowed us a much better retirement with lots of travel, a home in the south, the ability to help our children and take them on vacations, a wonderful home and the niceties of life. I buy foreign money through Knightsbridge that offers much better rates then the banks. I have a personnel banker, which I have cultivated, have a lot of fees dropped when doing business. As a person who made moderate income [lower middle income] over my life, you have to make a commitment to spend the time and energy doing research to make your money grow.

These days, when investment returns are so low (or non-existent), it’s a good time to educate folks on the importance of keeping their fees low. And it’s a perfect time to release a book like this. Good job promoting it Robb.

Started investing with the big banks in 2001 for my RRSP, pretty much on autopilot. Kind of ignored it until 2011 when I took a good look at my returns and realized I’d gained next to nothing. Withdrew all my money with them and went DIY. I understand markets have gone up since then but I’ve been much happier with my returns and awareness of the market, trends, etc…

My number one goal this year is to become a DIY investor and would love to learn about all the right ways to do this and how to go about moving our wealth to self managed investments. We are recently retired and now have the time, and it has become more important than ever to protect our wealth. Would also like to pass down some knowledge to our children to do the same! Would love a copy of this book!

Wow! Perfect timing as I was about to go to my bank for more investments. I am definitely going to read this book (fingers crossed for the draw)! Thank you for creating this site B&E — I have shared it with everyone I know and I am constantly on my young adult children to subscribe!

This is the sort of book that I would love to be able to hand down to my children.
It looks like a good read and easy to comprehend and everyone should take it to heart as we really are alone in the end!!

I beat the bank by spending time doing research into how I was invested. I was shocked to find out my advisor’s advice with high MER mutual funds had been so inappropriate for my needs. It was empowering to have taken the knowledge myself to learn how to manage my own money so that I would never have to rely on that type of advisor again.

I’ve fired my advisor back in 2009 and have been a DIY investor since. My fees dropped from about 2% to 0.2%. Everyone should stop procrastinating and learn about investing – it’s the best investment in your future. Looks like this book is a great tool for such education.

Excellent information. I am currently going through the process of finding/getting a new advisor for my investments outside of my company pension plan. This will be the sixth one in the last twenty-five years. Back in year one, I knew little about the investing world. Every year I learn a little more and gain more confidence in being able to make my own choices. I currently make my own choices and my advisor is there to only comment on my choices and make the changes I request. My work pension plan I manage completely myself and have realized double digit returns for the last 10+ years (one year was 24% !) My current advisor (for only the last six months) does not listen to my goals and only tries to steer my investments into products which are “textbook” typical for someone 5 years from retirement. Despite trying to tell him point blank that I don’t fit that mold, he doesn’t seem to listen. He will probably have a wake-up moment after I make the switch.

I moved from Dominion Securities to RBC Direct Investing 2 years ago where I was paying 1.4% to paying nothing in fees other than when I buy or sell equities. I contribute an automatic amount every month which means I pay no fees. What a difference it has made on how much I keep each month.

It’s a simple tip but moving your money to a no-fee chequeing account at a smaller bank/credit union rather than incurring account fees each month for no reason at a larger bank just because. This is something that a lot of Canadians still do and its extremely frustrating.

My “enlightenment” came when I discovered the reason why my account balance never seemed to rise, even after many years. I was invested in an emerging markets mutual fund with an MER of 3%. Needless to say, I no longer own that fund!

I fired my Financial Planner when I retired. Opened a self directed retirement investment account online. Sold all mutual funds and pay minimal fees and taxes by owning tax efficient investments including shares of the major banks in my registered retirement and open accounts.
Sounds like a good investing book to read Robb.

Sounds like an interesting read. Avoiding high fee products and going after tax efficiency are key factors in long term success. The other problem most people fail to consider when faced with planning for the long term particularly retirement is failing to recognize that our expenses fall in two buckets the repetitive and the variable (big renovations, new cars, special one off events). You must take both in to account and not simply target a desired income level.

It sounds like a good book for anyone to learn about investing and do like the big banks do investing.
I am retired and I do have a financial adviser from the same big bank. However, I am controlling him and tell him in what to invest and cut down on management fees or else. I have to initiate changes and drive him to lower fees. I just told him to switch my wife’s investments in TFSA and mutual funds to better performing products and get out of mutual funds totally as the fees are too high and returns are too low.
I might as well do my own investing and save at least $7000/year.
This book would a good guide for me. Where can you purchase this book and how much is it?
Thanks

Looks like a great resource! As a fee-based financial advisor (who moved from a captive, mutual fund only environment for the fee-based option), the top 10 summary should be included in all conversations advisors have with clients. At least that is the ideal from the regulatory, and professional associations’, goals.

Thank you so much for profiling this expert and his book. I am travelling down this road of limiting my family’s banking & investment fees. It is hard to find relative Canadian information. Seems like banks/investment companies don’t really want you to know.
This book would be very useful in unravelling the truth.

This book sounds like it would provide some valuable information. I’ve recently switched from bank mutual funds to etf’s using the couch potato strategy along with a few individual stocks as part of my overall mix. Rather than stagnating, my portfolio is growing but I have much to learn still!

Sounds like a worthwhile read. I became an enlightened investor reading Canadian Money Forum and various blogs like this one. My first step was to take my ‘financial advisor’ created portfolio to a fee-only advisor for assessment. His take was “I hate your portfolio!” I paid for a custom designed asset allocation, educated myself on how to enrol and manage a discount brokerage account, and have never looked back. Thanks very much to all those of you out there sharing your financial wisdom.

Big banks are not transparent. They tell you only what they want to tell you.
I’m in the process of closing my investment account. I don’t like the way they put the hook on you, and then get busy charging you fees, to maximize their profit. Their bottom line is much more important than their customers. That’s bye-bye for me. Looking forward to read this book.

I first had my eyes opened when I tried to sell a mutual fund product and was told there would be an extra cost because they had not collected fees from us for five years. It was that moment that has begun a journey of realizing that the banks definitely don’t always have our interests in mind.

I retired a year ago and still dont have a good grasp of how much my investments will be worth over the coming years, and how they should be structured to avoid fees and taxes. This book would be very useful to me.

I became a slightly more ‘enlightened investor’ when I realized the main reason my account was growing was because I kept putting more money in while I was getting meager returns which were being eaten up in mutual fund management fees and account fees.

Can’t wait to sign up to Wealthsimple’s recently announced free stock trading platform. This will surely give the banks a run for their money! We all all need to get to a point where the investors are getting paid, not the greedy advisors. The book would be a good self help read to validate what little value advisors actually add!

I don’t see how? I make the decision on which stocks to buy and sell. I can do it thru a full service broker @ $150 min. + per trade; discount broker @ ~$10 per trade; or $0.00 per trade on free trading platform being offered by Wealth Simple! You do the math…..I prefer the latter!

I remembered when I was first introduced to Wealthsimple and the concept of fees opened the world for me! How silly was I to think my financial advisor and the fees I was paying was ‘normal’. I’ve been a DIY investor using ETFs after following your blog

My friend who made money in marijuana stocks have been approached by the “Wealth Management Advisor” in one of the Green Banks for a meeting this week. I keep telling her – the “Wealth” part is for the banks, not for you. Nothing is ever free with the banks.

Hey, awesome blog! I just came across it. My wife and I are developing an investment plan and I found that we did have misplaced loyalty to TD. That’s changing thank goodness, but I think we personalized things too much. Anyway, thanks for the words of wisdom and I’ll share this article.

I have been working with different ETF and sector ETFs lately. Its interesting to see the different fees for what appears to be similar builds. If a computer is picking the trades, then some of the computers have definitely organized better service rates than others.

I became a DYI investor in 2010 after taking a keener interest in how my investments were performing and starting to read as many blogs and resources on the subject as I could. I was stunned to learn how much of my money would be lost to crazy high fees over the course of my career if I stayed with managed investments, so I made the change and haven’t looked back!

I have come across your book at Chapters as I needed a good read due to long drive on a bus tour. Read the book in 3 days. Could not let it go. I was meant to find this book and am so thankful that I came across it. It was meant to be. I have been a DIY investor for many years but bought 2 mutual funds last year.( Not smart) Went to the bank and had them transfer cash value to SDRSP account today.Thank you , thank you.

As one nearing retirement, and having been in mutual funds – like -forever;
if only many of us “knew then what we know now”, we could have saved ourselves gobs of money, and grown our savings a great deal more. Oh well, better late than never, and maybe I can help my kids be better informed with their savings plans.